One music industry executive said his company was told that Microsoft had made a large financial commitment to market a player this year. A senior TV network executive said that Microsoft had talked to the networks about selling their programming through the online store, but that "no deals are in place."

Music and video may be so crucial to how computers are used in the future — a potentially big source of new growth in software and hardware sales — that Microsoft cannot strategically afford to let Apple continue to hold the upper hand.

Apple is reported to have a wireless version of the iPod waiting in the wings, and it is also said to be close to introducing a version with a touch screen. Those bits of consumer polish might outshine Microsoft just as it was entering the business with its own hardware.